The Treasury recently invited consultation on its draft amendments to the Overseas Investment Regulations 2005.

Submissions are due by 5.00pm. Friday, 7 October 2016 and the supporting information can be found on the Treasury website.

What are the amendments?

As part of its increased focus on requiring consent for significant New Zealand assets, the following transactions are proposed to be exempted from all or part of the Overseas Investment Office (OIO) Consent process:

The requirement to first advertise land on the open market for acquisitions of leasehold farmland, where the cumulative duration of the lease is for a term of not more than twenty years.

Acquisition of leasehold land where a previously consented lease is being re-granted on substantially the same terms and conditions, and the substantive ownership of the property in question, is unchanged.

Transactions from one overseas person to another for specified land that is of a small scale and that has previously been screened.

Transactions where consent is otherwise required as a result of certain Public Works Act 1981 actions.

Custodians who are overseas persons but who hold investments on behalf of New Zealand investors from the requirement for consent for those investments only.

Are these changes significant?

The proposed exemptions are reasonably narrow so will probably not affect a large number of transactions. They are, however, in line with the OIO’s stated intentions of an increased focus on significant New Zealand assets. The exemptions are also reasonably complex with a number of conditions and reporting requirements. As a result investors will need to seek proper advice before getting comfortable with their ability to claim an exemption.

What else has changed?

OIO Application fees

From 4 July 2016 the fees for applying for OIO consent changed. Most of the fees have increased (up to $49,000) and the increases fund additional resources for the OIO.

Pre-application meetings

The OIO now encourages meetings between the Purchaser, the Purchaser’s representatives, and the OIO prior to any Application being submitted. Meetings are intended to assist the Purchaser to submit a clearly reasoned Application that contains all necessary information, and allow the Purchaser to explain its business plan and rationale for the transaction requiring consent.

New staff hired

The OIO has doubled its workforce since July 2016 in order to meet demand on both the application and enforcement sides.

Increased communication

The OIO has recently established a quarterly newsletter. The newsletter seeks to address the request for increased communication, highlight any new content on the OIO’s website, provide an update on any changes that have or are planned to occur, and provide top tips for the Application process.

Increased guidance

The OIO has increased their website content that provides information on the benefit to New Zealand factors and the good character tests, in response to a call for further information on the requirements for Applications.

Increased certainty of timing

The OIO provides statistics about how long it is taking to process an Application. These statistics are now being updated monthly.

Our thoughts

Although the five exemptions are relatively narrow in their scope, they are a welcome step by the OIO towards implementing their increased focus on significant New Zealand assets.

The business community also appreciates the OIO’s initiative to improve efficiency and provide greater transparency about its process. We will watch with interest to see whether or not the steps taken have their desired effect and whether or not they go far enough.

What can you do?

If you would like assistance with making a submission or would like to speak to someone about overseas investment, please contact Gerald Fitzgerald.